Travel Guru
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I must admit I've never crossed the border by train but I have been over lots of times by car. In a car you can do it all at the border,they ask you a few questions, where are you going, where are you are staying, take your picture with a webcam, get you to put your fingers on a glass plate to get your fingerprints and charge you a few US dollars for the privilege. They will staple a transponder into your passport which you will have to have removed before you leave the country.
Going by train though (unless someone on here can tell you otherwise) I think it would be wise to get a visa in advance.
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Travel Guru
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Now here's the grey area. It's true, you don't need a visa to enter the USA if you're from the UK because of the visa waiver program, and you're right about having to have a machine readable passport, but take it from me, I've been over the border from Canada to the USA many times and they will nobble you as you go through. You will have to fill out a form, they will photograph and finger print you, and you will have a piece of card stapled into your passport (hold this up to the light and you can see the transponder in it!). The point I'm making is it would be nice to know the procedure if doing this by train to see if you can get this done in advance. I would email Amtrak and ask.
Returning to Canada isn't such a big deal and I've gone over the border without even having my passport looked at. Make sure you ask them to remove the cardboard customs slip when you go through the border though.
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